True Story: Fred in our office ran into another agency's market analysis that simply took the city of Montpelier assessed value, and divided it by .6 to get the market value. Huh? Well, it's easy to check how accurate that method is. Just take some sold houses (that are comparable), multiply by .6 and see if that's the assessed value. Guess what? They weren't even close.
Very bluntly, a market analysis is used to find out how much someone's house is likely to sell for. Unfortunately, it's as much art as it is science. But, basically, here's how it's done-when it's done correctly.
•1. A Realtor takes a good, long, careful, and detailed look at a house-noting not only the number of bedrooms, but the overall level of finish, the feel, the flow, everything. Then, since we're here in Barre and Montpelier, and there are no exact comps, much of the detail work is put aside.
•2. Comps: Finding comparable SOLD properties is the next step. They have to be sold-as opposed to For Sale to be used as a comp. That makes sense if you think about it. I mean, if a property is listed at $225,000 but ultimately sells at $215,000 then it's worth $215,000. So, no fair looking at your neighbor's asking price and using that as a comp.
•3. Here's where the art comes into play. Not all three bedroom houses are the same. And it doesn't really matter how much the owner has put into the house. Always think from the buyer's side: How much would a buyer pay? If two houses are EXACTLY THE SAME (yeah, right), but one has a fireplace and one doesn't, then how much will a buyer pay for a fireplace? See how this can be tricky? My wife wouldn't even look at a place without a fireplace or woodstove, but other buyers couldn't care less. The same thing goes with hardwood floors, a garage, single floor living, etc.
•4. Make adjustments. A fireplace probably makes the house worth more. Updated kitchen probably makes the house worth more. Old windows probably make the house worth less. How much more? More or less than what? Thus, the art.
•5. Add (or subtract) all the adjustments. The result is an estimate of what the subject house is likely to sell for. Will it? Well...
Comments(2)